In the latest trading session, Shopify (SHOP) closed at $1,023.95, marking a -0.68% move from the previous day. This move was narrower than the S&P 500’s daily loss of 1.1%. Meanwhile, the Dow lost 0.89%, and the Nasdaq, a tech-heavy index, added 0.03%.
Coming into today, shares of the cloud-based commerce company had lost 25.6% in the past month. In that same time, the Computer and Technology sector lost 5.94%, while the S&P 500 lost 1.81%.
Investors will be hoping for strength from Shopify as it approaches its next earnings release. The company is expected to report EPS of $1.41, down 10.76% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.35 billion, up 38.14% from the prior-year quarter.
Any recent changes to analyst estimates for Shopify should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.29% lower. Shopify currently has a Zacks Rank of #5 (Strong Sell).
Investors should also note Shopify’s current valuation metrics, including its Forward P/E ratio of 148.54. This valuation marks a premium compared to its industry’s average Forward P/E of 23.8.
We can also see that SHOP currently has a PEG ratio of 4.61. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The Internet – Services was holding an average PEG ratio of 2.7 at yesterday’s closing price.
The Internet – Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 178, putting it in the bottom 31% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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